q3 2017 financial update - nalcor energy€¦ · q3 2014 q3 2015 q3 2016 q3 2017 16 $119 $92...
TRANSCRIPT
Q3 2017 Financial Update November 8, 2017
Agenda
• Stan Marshall President and CEO
• Derrick Sturge Executive VP Finance & CFO
• Questions
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Forward-Looking Information Certain statements in this presentation are “forward-looking statements” based on Nalcor’s current expectations, estimates, projections and assumptions, subject to risks and uncertainties. Statements containing words such as “could”, “expect”, “may”, “anticipate”, “believe”, “intend”, “estimate”, “plan” and similar expressions constitute forward-looking statements. By their nature, forward-looking statements require Management to make assumptions and are not subject to important unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. While Management considers these assumptions to be reasonable and appropriate based on information currently available, there is a risk that they may not be accurate. Nalcor assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.
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Stan Marshall, CEO
LIL stringing crew
Soldiers Pond
Churchill Falls switchyard & extension
North Dam
Powerhouse
Muskrat Falls Generation Project
Derrick Sturge, EVP Finance and CFO
Key Metrics As at: Sept 30, 2017 Dec 31, 2016 Change
Total Assets ($ billions) $17.7 $14.1 $3.6
Income Producing Assets ($ billions) $4.0 $3.6 $0.4
Capital Structure (Debt / Capital) 68% 61% 7%
For the period ended September 30: YTD 2017 YTD 2016 Change
Profit ($ millions) $157 $74 $83
Operating Profit ($ millions) $131 $74 $57
EBITDA $329 $227 $102
Funds from Operations ($ millions) $284 $177 $107
Capital Expenditures ($ millions)1 $2,163 $2,040 $123
Electricity Sales (TWh):
Regulated 5.8 5.7 0.1
Export – Hydro Québec (HQ)2 21.7 20.7 1.0
Export – Other Markets 1.2 1.2 -
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1 Excludes Maritime Link 2 Export sales to Hydro Quebec reflect energy billed
Business Segment Profit For the period ended September 30: ($ millions) YTD 2017 YTD 2016 Change
Hydro 35 (5) 40
Power Development (1) (1) -
Power Supply1 23 32 (9)
Energy Markets 8 13 (5)
Offshore Development 105 48 57
Corporate & Intersegment (13) (13) -
Profit 157 74 83
14 1 Includes Nalcor’s 65.8% ownership of Churchill Falls
YTD Electricity Export Prices
$46
$38
$30 $29
$44
$27
$20 $21
$15.00
$30.00
$45.00
$60.00
Q3 2014 Q3 2015 Q3 2016 Q3 2017
Realized Export Price (CAD/MWh)*
Average Market Price (USD/MWh)
15 *Realized Export Price excludes sales to HQ under Power Contract
Q3 2014 Q3 2015 Q3 2016 Q3 2017
16
$119
$92
$61 $67
$109
$54 $44
$51
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
Realized Price (CAD/bbl)
Average Dated Brent Price(USD/bbl)
299,035 bbls
1,493,742 bbls
2,425,041 bbls
544,604 bbls
YTD Oil Price & Production
YTD Regulated Energy Sales
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(TWh)
5.2 5.6 5.8 5.7 5.8
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q3 2013 Q3 2014 Q3 2015 Q3 2016 Q3 2017
Total Assets (as at September 30, 2017) Regulated Hydro
14%
Churchill Falls 3%
Oil & Gas 8%
Lower Churchill 48%
LCP Debt Proceeds and
Restricted Cash 14%
Maritime Link 9%
Other 4%
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Assets Under Development : 77% Income Producing Assets: 23%
YTD Business Segment Capital Expenditures
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1 Includes Nalcor’s 65.8% ownership of Churchill Falls 2 Excludes Maritime Link
For the period ended September 30 ($ millions) YTD 2017 YTD 2016 Change
Hydro 237 125 112
Power Development 821 754 67
Power Supply1, 2 962 984 (22)
Energy Markets - 1 (1)
Offshore Development 140 173 (33)
Corporate & Intersegment 3 3 -
Total 2,163 2,040 123
Lower Churchill Project Capital Expenditures For the period ended ($ millions) YTD 2017 YTD 2016 Change Total To Date
Muskrat Falls 743 696 47 3,684
Labrador Transmission Assets
69 122 (53) 817
Labrador-Island Link 726 734 (8) 3,162
Nalcor Facilities Capital Costs
1,538 1,552 (14) 7,663
Capitalized Interest & Financing Costs 203 144 59 7551
Transition to Operations 5 3 2 8
Total Capital Costs for Nalcor Components 1,746 1,699 47 8,426
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1 Excludes $86 million of allowance for funds used during construction on Nalcor’s Class A limited partnership units in the LIL LP that are eliminated upon consolidation
YTD Funds From Operations
146 119
93
177
284
0
50
100
150
200
250
Q3 2013 Q3 2014 Q3 2015 Q3 2016 Q3 2017
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(millions of dollars)
YTD 2017 Financing Activities
Cash from Operations 9%
Equity Contributions 15%
Partnership Contributions
3%
LCP Debt Proceeds 62%
Hydro Debt Proceeds 11%
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Capital Structure
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56% 47% 43% 38% 39%
72% 69% 65% 61% 68%
44% 53% 57% 62% 61%
28% 31% 35% 39% 32%
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017
Equity
Debt
Outlook for the Remainder of 2017
• Strong financial performance in first nine months of 2017
– Partially driven by resolution of issues related to 2013 General Rate Application and Hebron lease finalization and settlement at Bull Arm
– Q4 may not be as strong as the first three quarters
• Continued focus on completion of capital program, general rate application, and moving Hebron to first oil
• Start to prepare for 2018 transition year
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Outlook for 2018
• Assets moving out of the construction/ development phase (TL 267, Hebron, Labrador Island Link, Labrador Transmission Assets, and Maritime Link)
• Hebron work at Bull Arm completed
• First delivery of electricity from Labrador to the Island
• Capital expenditures starting to reduce – but still very significant
• Anticipate lower income levels in 2018
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Questions